PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

__________

No. 08-4814

__________

IN RE: SCHERING PLOUGH CORPORATION

ERISA LITIGATION

Schering Plough Defendants,

Appellants

(Amended pursuant to the Clerk’s Order dated 01/15/09)

_________

On Appeal from the United States District Court

for the District of New Jersey

(D.C. Civil No. 03-cv-01204)

District Judge: Honorable Katharine S. Hayden

__________

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Argued on September 29, 2009

Before: RENDELL AND AMBRO, Circuit Judges,

and McVERRY,* District Judge

(Filed: December 21, 2009)

Eric C. Bossett, Esq. [ARGUED]

Covington & Burling

1201 Pennsylvania Avenue, N.W.

Washington, DC 20004

Douglas S. Eakeley, Esq.

Lowenstein Sandler

65 Livingston Avenue

Roseland, NJ 07068

Counsel for Appellant

Schering Plough Defendants

(continued)

__________________

* Honorable Terrence F. McVerry, Judge of the United

States District Court for the Western District of

Pennsylvania, sitting by designation.

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Kent A. Mason, Esq.

Davis & Harman

1455 Pennsylvania Avenue,l N.W., Suite 12300

Washington, DC 20004

Counsel for Amicus - Appellant

American Benefits Council

Katherine B. Bernstein, Esq.

Edward W. Ciolko, Esq.

Peter H. LeVan, Jr., Esq. [ARGUED]

Joseph H. Meltzer, Esq.

Barroway, Topaz, Kessler, Meltzer & Check

280 King of Prussia Road

Radnor, PA 19087

Joseph J. DePalma, Esq.

Jennifer Sarnelli, Esq.

Lite, DePalma, Greenberg & Rivas

Two Gateway Center, 12th Floor

Newark, NJ 17102

(continued)

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Susan D. Pontoriero, Esq.

Premier Executive Suites

Suite 250

Brook 35 Plaza

2150 Highway 35

Sea Girt, NJ 08750

Counsel for Appellees

Michele Wendel, Adrian Fields,

Jingdong Zhu, on behalf of himself and

All others similarly situated.

Elizabeth Hopkins, Esq. [ARGUED]

U.S. Department of Labor

N-4611

200 Constitution Avenue, N.W.

Washington, DC 20210

Counsel for Amicus Appellee

Secretary of Labor

Jay E. Sushelsky, Esq.

American Association of Retired Persons

Room B4-250

601 E Street, N.W.

Washington, DC 20049

Counsel for Amicus Appellee

American Association of Retired Persons

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Agnieszka Fryszman, Esq.

Cohen Milstein, Sellers & Toll

1100 New York Avenue, N.W.

West Tower, Suite 500

Washington, DC 20005

Counsel for Amicus Appellee

Pension Rights Center

__________

OPINION OF THE COURT

__________

RENDELL, Circuit Judge.

Michele Wendel is a former employee of Schering-

Plough who participated in the Schering-Plough Corporation

Employees’ Savings Plan, a defined contribution savings plan

sponsored by Schering-Plough. Wendel and two other former

Schering-Plough employees brought a class action against

Schering-Plough and certain of its officers and directors under

ERISA § 502(a)(2) arising out of the offering and management

of the Plan. The two other plaintiffs were dismissed by

stipulation in 2006 and Wendel is now the sole class

representative. The District Court concluded that a release

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Wendel signed in connection with her separation from Schering-

Plough violated ERISA and was therefore void. It then found

the requirements of Rule 23 to be satisfied and certified a class

consisting of Plan investors. On appeal, a host of issues relating

to ERISA, Wendel’s release, and class certification are before

us. We will vacate the order certifying the class and remand for

proceedings consistent with this opinion.

I.

The Schering-Plough Corporation Employees’ Savings

Plan is an “individual account plan” under the Employee

Retirement Income Security Act of 1974 (“ERISA”) 29 U.S.C.

§§ 1001-1461. The Plan allows participants to choose among a

variety of investment funds, including the Schering-Plough

Stock Fund, and to contribute as much as 50% of their pre-tax

compensation to one or more of these funds. As the name

suggests, the Schering-Plough Stock Fund is comprised

primarily of shares of Schering-Plough common stock. It was

one of fourteen funds offered by the company as investment

options for the employees’ pension contribution. The value of

Schering-Plough common stock declined during fiscal years

2001 and 2002, falling from a high of $60 per share to a low of

below $20 per share in June 2003. Wendel alleges that this

decline was the result of Schering-Plough’s violations of Food

and Drug Administration (“FDA”) regulations, delays in FDA

approval of new products, and Schering-Plough’s participation

in illegal kickback schemes.

Liability for a fiduciary’s breach of duty is established by1

ERISA § 409(a), 29 U.S.C. § 1109(a), which provides: “Any

person who is a fiduciary with respect to a plan who breaches

any of the responsibilities, obligations, or duties imposed upon

fiduciaries by this subchapter shall be personally liable to make

good to such plan any losses to the plan resulting from such

breach.”

The defendants are (1) Schering-Plough Corporation2

(“Schering-Plough”), as sponsor of the Plan; (2) Schering-

Plough’s former CEO, Richard J. Kogan, and individual

members of the Schering-Plough Board’s Pension Committee

(collectively, the “Director Defendants”); (3) Schering-Plough’s

Employee Benefits Committee and its members (collectively,

the “Benefits Committee”); and (4) Schering-Plough’s

Employee Benefits Investment Committee and its members

(collectively, the “Investment Committee”).

Section 502(a)(2), 29 U.S.C. §§ 1132(a)(2), provides for civil3

enforcement of ERISA’s fiduciary provisions “by a participant,

beneficiary or fiduciary for appropriate relief under [ERISA

§ 409].”

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Initially, three plaintiffs, Jingdong Zhu, Adrian Fields,

and Michele Wendel, filed a class action under ERISA § 409(a)1

asserting four claims of breach of fiduciary duty against

numerous defendants based on facts relating to this decline in2

value. Their complaint asserted claims on behalf of the Plan

under ERISA § 502(a)(2) and sought to restore losses sustained3

Wendel’s Separation Agreement provides, in pertinent part:4

In exchange for the “enhanced” severance

payment, I release the Company (which includes

Schering-Plough, and all of its subsidiaries,

affiliates, officers, directors, and employees) from

all claims and liabilities which I have or may have

against it as of the date on which I sign this

Agreement . . . . Furthermore, I promise that I

will not file a lawsuit against the Company in

connection with any aspect of my employment or

termination. I also waive the right to all remedies

in any such action that may be brought on my

behalf.

(Joint App. 331.)

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by the Plan as a result of defendants’ breaches of their fiduciary

obligations. Zhu and Fields are no longer parties.

On July 20, 2000, after ten years of employment with

Schering-Plough, Wendel entered into a Separation Agreement

that included an enhanced severance package (specifically, an

additional severance payment of $13,943.60) in consideration

for a general release and a covenant not to sue the company.4

Because Wendel is the sole remaining class representative, one

of the central issues we must consider is what effect, if any,

Wendel’s release and covenant not to sue have on her ability to

The complaint asserted four counts. The District Court5

concluded that Rule 23 could not be satisfied as to one count

that was based on the alleged failure to disclose information,

because questions pertaining to individual reliance rendered a

class action inappropriate as to that count. Wendel did not

cross-appeal on this issue.

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bring this action under ERISA § 502(a)(2) and to represent the

class in accord with Rule 23.

Wendel pursues three claims stemming from defendants’

alleged role in and knowledge of the alleged causes of the

decline in the value of Schering-Plough stock, and from

defendants’ decision to continue to maintain the Plan’s

significant investment in Schering-Plough stock and to offer the

Schering-Plough Stock Fund as an investment option despite

this knowledge. Wendel alleges that, since 1998, defendants5

knew or should have known that Schering-Plough stock was

overvalued and an imprudent investment because of undisclosed

problems with its FDA compliance systems and because of

expected delays in rolling out its anticipated “blockbuster” drug,

Clarinex. Wendel alleges that Schering-Plough disclosed these

problems in a press release in 2001, immediately after which

shares fell 15% in heavy trading and analysts dropped ratings

and projected earnings for the company. She further alleges that

defendants knew or should have known that Schering-Plough

was engaged in illegal kickbacks and fraud against the

Government, which ultimately resulted in substantial settlement

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payments by the company. Finally, Wendel alleges that the

decline in the value of Schering-Plough common stock was a

result of these problems, causing the Plan to suffer tens of

millions of dollars in losses.

Wendel makes three breach-of-fiduciary-duty claims

based on these facts. First, she alleges that defendants failed to

prudently and loyally manage the Plan’s assets. Second, Wendel

alleges that Schering-Plough, the Director Defendants, and the

Benefits Committee Defendants failed to adequately monitor

and inform the appointed fiduciaries, the Investment Committee

Defendants. Third, she alleges that defendants breached their

fiduciary duty to avoid conflicts of interest, which prevented

defendants from acting exclusively in the best interests of the

Plan participants and beneficiaries.

Wendel moved for class certification pursuant to Fed. R.

Civ. P. 23(a) and either 23(b)(1) or 23(b)(2). The proposed

class included all participants and beneficiaries of the Plan since

July 29, 1998. The District Court decided, as an initial matter,

that the release executed by Wendel was void under ERISA

§ 410(a) because it relieved fiduciaries of their obligations.

Therefore, the impact of her release on the class certification

issue was not considered. The District Court concluded that

class certification was appropriate for all three of the above

Having so found, the District Court did not consider whether6

they satisfied Rule 23(b)(2).

The District Court had jurisdiction under 28 U.S.C. §§ 13317

and 1337. We have jurisdiction under 28 U.S.C. § 1292(e) and

Fed. R. Civ. P. 23(f).

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claims under Rule 23(a) and Rule 23(b)(1)(B). The District6

Court defined the class as “[a]ll persons who were participants

in or beneficiaries of the Schering-Plough Corporations

Employees’ Savings Plan at any time between July 29, 1998 to

the present and whose accounts included investments in

Schering stock.” (Joint App. 35.) In so doing, the District Court

adopted and incorporated the Report and Recommendation of

Magistrate Judge Falk, in addition to offering its own opinion.

(Joint App. 35.) Defendants petitioned for leave to appeal the

class certification decision on an interlocutory basis pursuant to

Fed. R. Civ. P. 23(f). We granted defendants’ petition for an

interlocutory appeal. 7

II.

As noted above, Wendel is now the sole representative of

the class, and she signed a Separation Agreement with Schering-

Plough that includes both a release and a covenant not to sue.

As the existence of her release has been a focus of the parties’

arguments, we first confront two preliminary issues regarding

her release: (1) was the District Court correct in concluding that

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ERISA § 410(a) renders the release and the covenant not to sue

void as against public policy, and thus of no force? As we

answer this question in the negative, we will address an

additional question: (2) do the release and covenant not to sue

bar Wendel from being able to maintain an action under ERISA

§ 502(a)(2), as defendants urge?

A. ERISA § 410(a)

ERISA § 410(a) provides that “any provision in an

agreement or instrument which purports to relieve a fiduciary

from responsibility or liability for any responsibility, obligation,

or duty under this part shall be void as against public policy.”

29 U.S.C. § 1110(a). The District Court concluded that, in light

of this provision, “the release and covenant not to sue at issue

here do not extinguish Wendel’s claims and have no bearing on

the typicality inquiry.” (JA 31.) In reaching this conclusion, the

District Court relied on Baker v. Kingsley, No. 03-1750, 2007

WL 1597654, at *4 (N.D. Ill. May 31, 2007), where the district

court stated that “ERISA itself prohibits parties from waiving

claims for breaches of fiduciary duty,” and used this as an

alternative ground for rejecting a typicality challenge against

plaintiffs who had signed releases.

We disagree with the District Court’s application of

§ 410(a) to an individual release and covenant not to sue,

because we conclude that § 410 applies only to instruments that

purport to alter a fiduciary’s statutory duties and responsibilities,

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whereas an individual release or covenant not to sue merely

settles an individual dispute without altering a fiduciary’s

statutory duties and responsibilities. We agree with the view of

the Eighth Circuit Court of Appeals in Leavitt v. Northwestern

Bell Telephone Co., 921 F.2d 160 (8th Cir. 1990):

In our view, a release is not an ‘agreement or

instrument’ within the meaning of section

1110(a). Section 1110(a) prohibits agreements

that diminish the statutory obligations of a

fiduciary. A release, however, does not relieve a

fiduciary of any responsibility, obligation, or duty

imposed by ERISA; instead, it merely settles a

dispute that the fiduciary did not fulfill its

responsibility or duty on a given occasion.

Id. at 161-62; see also Boeckman v. A.G. Edwards, Inc., 461 F.

Supp. 2d 801, 808 (S.D. Ill. 2006) (ERISA § 410(a) does not

create a “ blanket prohibition of the release of claims for breach

of fiduciary duty”).

Baker appears to be the only instance of a court’s

applying § 410(a) to invalidate an individual release. It is an

unreported opinion in which this appears as mere dicta with no

supporting reasoning. Leavitt and Boeckman are considerably

more persuasive. We adopt their reasoning and read § 410(a) to

extend only to contractual or other devices that purport to alter

the statutory obligations of a fiduciary under ERISA, and not to

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reach a release of claims signed by an individual claiming the

breach of a fiduciary duty. Otherwise, individuals could never

amicably resolve litigation over these issues.

Accordingly, ERISA § 410(a) does not render Wendel’s

individual release and covenant not to sue void against public

policy, and the effect of her release, therefore, must be

considered.

B. Wendel’s Release as a Bar

Defendants contend that Wendel’s release is a bar to the

instant action. We disagree. Section 502(a)(2) claims are, by

their nature, plan claims. See, e.g., Graden v. Conexant Sys.,

Inc., 496 F.3d 291, 295 (3d Cir. 2007). Wendel’s complaint

frames her causes of action in terms of claims brought “on

behalf of” the Plan. Nowhere does she present the claims as

anything but causes of action that belong to the Plan and are

based on duties owed to the Plan. There is very little authority

suggesting that an individual who has signed a release is barred

from bringing claims under ERISA § 502(a)(2) on behalf of an

ERISA plan. Indeed, there appears to be only one case to have

so concluded. See Howell v. Motorola, Inc., No. 03-5044, 2005

WL 2420410, at *4-6 (N.D. Ill. Sept. 30, 2005) (valid release

precludes § 502(a)(2) claim brought on behalf of a plan). The

vast majority of courts have concluded that an individual release

has no effect on an individual’s ability to bring a claim on behalf

of an ERISA plan under § 502(a)(2). See Bowles v. Reade, 198

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F.3d 752, 759-62 (9th Cir. 1999) (concluding that the plaintiff’s

§ 502(a)(2) claims on behalf of the plans were unaffected by her

release); Johnson v. Couturier, No. 05-2046, 2006 WL 2943160,

at *2 (E.D. Cal. Oct. 13, 2006) (release does not preclude

§ 502(a)(2) action); In re JDS Uniphase Corp. ERISA Litig., No.

03-4743, 2006 WL 2597995, at *1 (N.D. Cal. Sept. 11, 2006)

(“The release . . . do[es] not bar ERISA fiduciary duty claims

brought by plan beneficiaries on behalf of the plan.”). Indeed,

a number of courts have held that, as a matter of law, an

individual cannot release the plan’s claims, and so for that

reason an individual release cannot bar an individual from

bringing a claim on behalf of an ERISA plan under ERISA

§ 502(a)(2). See, e.g., In re Aquila ERISA Litig., 237 F.R.D.

202, 210 (W.D. Mo. 2006) (“[T]he instant claims in this action

are brought on behalf of the Plan pursuant to ERISA

§ 502(a)(2), not by ERISA plan participants seeking individual

benefits. As a matter of law, a plan participant cannot release

the Plan’s claims.”); In re Williams Cos. ERISA Litig., 231

F.R.D. 416, 423 (N.D. Okla. 2005) (“[T]he Court notes that the

claims here are brought on behalf of the Plan, and a participant

cannot release the Plan’s claims, as a matter of law.”) (citation

omitted); In re Polaroid ERISA Litig., 240 F.R.D. 65, 75

(S.D.N.Y. 2004) (“[N]umerous courts have held that under

ERISA, individuals do not have the authority to release a . . .

plan’s right to recover for breaches of fiduciary duty.”).

Defendants urge that the issue turns on whether the

ERISA plan is a defined benefit plan or a defined contribution

A defined benefit plan is a pension plan under which an8

employee receives a set monthly amount upon retirement for his

or her life, with the benefit amount typically based upon the

participant’s wages and length of service. A defined

contribution plan is a retirement plan whereby the employer,

employee, or both make contributions to an individual’s account

during employment, but with no guaranteed retirement benefit,

and with the ultimate benefit based exclusively upon the

contributions to, and investment earnings of the plan. The

benefit ceases when the account balance is depleted, regardless

of the retiree’s age or circumstances. See ERISA §§ 3(34)-(35),

29 U.S.C. § 1002(34)-(35); P. Schneider & B. Freedman,

ERISA: A Comprehensive Guide § 3.02 (2d ed. 2003).

Contrary to defendants’ argument, the recent Supreme Court9

decision in LaRue v. DeWolff, Boberg & Associates, Inc., 128 S.

Ct. 1020, 552 U.S. 248 (2008), does not suggest otherwise.

LaRue involved a claim by a single participant in a defined

contribution plan, asserting that the trustees breached their

duties by failing to follow the participant’s investment

(continued...)

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plan. We disagree. Defined contribution ERISA plan claims8

are no different in this regard from defined benefit ERISA plan

claims. In both cases, the ERISA § 502(a)(2) claim is brought

on behalf of the plan. There is no reason that an individual’s

ability to bring a § 502(a)(2) claim would differ depending on

whether the plan was a defined benefit plan or a defined

contribution plan, and no authority that suggests that such a

difference is or should be recognized. Moreover, district courts9

(...continued)9

directions. The Fourth Circuit Court of Appeals had held that

the plaintiff could not bring a claim under § 502(a)(2) because

the claim sought to protect the plaintiff’s individual rights,

rather than to protect the entire plan. Id. at 1023. The Supreme

Court vacated the order, after concluding that § 502(a)(2) claims

were available to redress fiduciary misconduct in defined

contribution plans, even though the relief may be individualized.

The Court stated that “whether a fiduciary breach diminishes

plan assets payable to all participants and beneficiaries, or only

to persons tied to particular individual accounts, it creates the

kind of harms” redressible under § 502(a)(2). Id. at 1025.

LaRue is of no help to defendants. First, it did not involve a

class action, nor did it involve an individual who has signed a

release or a covenant not to sue. Second, it broadens, rather than

limits, the relief available under § 502(a)(2) in holding that a

derivative fiduciary claim may be brought on behalf of a “plan,”

even if the ultimate relief may be individualized. Defendants’

contention that LaRue establishes that there are no “plan claims”

in the defined contribution context is incorrect.

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have applied Bowles (which involved a defined benefit plan and

found that an individual release did not bar an individual from

bringing an ERISA § 502(a)(2) claim) to defined contribution

plans. See, e.g., In re Aquila ERISA Litig., 237 F.R.D. 202, 210

(W.D. Mo. 2006).

We conclude that Wendel’s release does not bar her from

bringing the § 502(a)(2) claim on behalf of the Plan.

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Accordingly, we will consider whether class certification of the

claims, with Wendel as the sole proposed class representative,

was appropriate under Rule 23.

III.

Our review of a district court’s grant of class certification

is for “abuse of discretion, which occurs if the district court’s

decision rests upon a clearly erroneous finding of fact, an errant

conclusion of law or an improper application of law to fact.” In

re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 312 (3d

Cir. 2008) (internal quotation omitted).

It is well established that “[a] class may be certified only

if the court is ‘satisfied, after a rigorous analysis, that the

prerequisites of Rule 23(a) have been satisfied.’” Beck v.

Maximus, 457 F.3d 291, 297 (3d Cir. 2006) (quoting Gen. Tel.

Co. Sw. v. Falcon, 457 U.S. 147, 161 (1982)). The requirements

“set out in Rule 23 are not mere pleading rules.” Hydrogen

Peroxide, 552 F.3d at 316. Unless each requirement of Rule 23

is actually met, a class cannot be certified. Id. at 320. As a

result, “[a]n overlap between a class certification requirement

and the merits of a claim is no reason to decline to resolve

relevant disputes when necessary to determine whether a class

certification requirement is met.” Id. at 316. Accordingly, we

have instructed district courts, where appropriate, to “‘delve

beyond the pleadings to determine whether the requirements for

class certification are satisfied.’” Id. at 316 (quoting Newton v.

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Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 167

(3d Cir. 2001)).

Rule 23(a) sets out four “prerequisites” for an individual

to be a class representative:

(1) the class is so numerous that joinder of all

members is impracticable;

(2) there are questions of law or fact common

to the class;

(3) the claims or defenses of the representative

parties are typical of the claims or defenses

of the class; and

(4) the representative parties will fairly and

adequately protect the interests of the

class.

Fed. R. Civ. P. 23(a). These four requirements are referred to,

respectively, as “numerosity,” “commonality,” “typicality,” and

“adequacy.”

If all of these requirements are met, “a class of one of

three types (each with additional requirements) may be

certified.” Hydrogen Peroxide, 552 F.3d at 309. These three

types are set out in Fed. R. Civ. P. 23(b)(1)-(3). Here, Plaintiff

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sought certification under Rule 23(b)(1) and 23(b)(2), and the

District Court certified the class under Rule 23(b)(1). Rule

23(b)(1) provides that a class action may be maintained if:

prosecuting separate actions by or against

individual class members would create a risk of .

. . adjudications with respect to individual class

members that, as a practical matter, would be

dispositive of the interests of the other members

not parties to the individual adjudications or

would substantially impair or impede their ability

to protect their interests.

Fed. R. Civ. P. 23(b)(1).

Because “each requirement of Rule 23 must be met, a

district court errs as a matter of law when it fails to resolve a

genuine legal or factual dispute relevant to determining the

requirements.” Hydrogen Peroxide, 552 F.3d at 320. Thus, in

reviewing the District Court’s decision to certify the class, we

must assess whether an adequately “rigorous analysis” was

conducted to determine that each of the Rule 23 requirements

was satisfied. Beck, 457 F.3d at 297.

A.

The first two Rule 23(a) prerequisites are plainly satisfied

here. Numerosity, the prerequisite that the class be so numerous

It is well established that only one question of law or fact in10

common is necessary to satisfy the commonality requirement,

despite the use of the plural “questions” in the language of Rule

23(a)(2). See, e.g., In re “Agent Orange” Prod. Liab. Litig.,

818 F.2d 145, 166-67 (2d Cir. 1987); Weiss v. York Hosp., 745

F.2d 786, 808-09 (3d Cir. 1984).

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that joinder of all members is impracticable, is satisfied since

ERISA § 502(a)(2) claims are brought on behalf of a Plan, and

over 10,000 people were invested in the Schering-Plough Stock

Fund as of December 31, 2000.

Commonality is also clearly satisfied. Commonality

requires that “there are questions of law or fact common to the

class.” Fed. R. Civ. P. 23(a)(2). The threshold for establishing

commonality is straightforward: “The commonality requirement

will be satisfied if the named plaintiffs share at least one

question of fact or law with the grievances of the prospective

class.” Baby Neal v. Casey, 43 F.3d 48, 56 (3d Cir. 1994). 10

The requirement of commonality is satisfied here. The

District Court, adopting the Report and Recommendation,

correctly found that there were many questions of law or fact

common to the named plaintiff and the class, including whether

defendants were fiduciaries; whether defendants breached their

duties to the Plan by failing to conduct an appropriate

investigation into the continued investment in Schering-Plough

stock; whether defendants breached their duties by continuing

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to invest in Schering-Plough stock and in continuing to offer the

Schering-Plough Stock Fund; whether the defendants in

supervisory roles failed in their monitoring of the Investment

Committee Defendants; whether defendants failed to retain

independent fiduciaries; and whether the Plan suffered losses as

a result of defendants’ breaches. These types of common

questions are sufficient to meet the commonality requirement in

ERISA cases. See Williams, 231 F.R.D. at 421 (finding

commonality satisfied when common questions included

whether defendants were fiduciaries and whether defendant

breached their fiduciary duties under ERISA); Polaroid, 224

F.R.D. at 74 (same); In re Elec. Data Sys. Corp. ERISA Litig.,

224 F.R.D. 613, 622 (E.D. Tex. 2004) (same).

B.

It is not as clear, however, that the other two Rule 23(a)

prerequisites—typicality and adequacy—are satisfied.

1. Typicality

Typicality requires that “the claims or defenses of the

representative parties are typical of the claims or defenses of the

class.” Fed. R. Civ. P. 23(a)(3). All four Rule 23(a)

prerequisites for class certification serve as “guideposts for

determining whether maintenance of a class action is

economical and whether the named plaintiff’s claim and the

class claims are so interrelated that the interests of the class

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members will be fairly and adequately protected in their

absence.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 626

n.20 (1997) (citations and internal quotation marks omitted).

The typicality requirement furthers this aim by ensuring that the

class representatives are sufficiently similar to the rest of the

class—in terms of their legal claims, factual circumstances, and

stake in the litigation—so that certifying those individuals to

represent the class will be fair to the rest of the proposed class.

See, e.g., Newton, 259 F.3d at 182; Beck, 457 F.3d at 296; In re

Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig.,

55 F.3d 768, 785, 796 (3d Cir. 1995). Since one cannot assess

whether an individual is sufficiently similar to the class as a

whole without knowing something about both the individual and

the class, courts must consider the attributes of the proposed

representatives, the class as a whole, and the similarity between

the proposed representatives and the class. This investigation

properly focuses on the similarity of the legal theory and legal

claims; the similarity of the individual circumstances on which

those theories and claims are based; and the extent to which the

proposed representative may face significant unique or atypical

defenses to her claims. See, e.g., Newton, 259 F.3d at 183-85;

Beck, 457 F.3d at 295-97, 300-01.

The requirement that the legal theory and legal claims of

the proposed representative must be typical of those of the class

comes directly from the plain language of the Rule, which

requires that “the claims or defenses of the representative parties

are typical of the claims or defenses of the class.” Fed. R. Civ.

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P. 23(a)(3). The similarity between claims or defenses of the

representative and those of the class does not have to be perfect.

Baby Neal, 43 F.3d at 56; Hassine v. Jeffes, 846 F.2d 169, 177-

78 (3d Cir. 1988). We have previously said that the named

plaintiffs’ claims must merely be “typical, in common-sense

terms, of the class, thus suggesting that the incentives of the

plaintiffs are aligned with those of the class.” Beck, 457 F.3d at

295-96.

The requirement that the individual factual circumstances

underlying the legal theory and legal claims of the representative

must be sufficiently similar to those of the class stems from

similar considerations. Ensuring that absent class members will

be fairly protected requires the claims and defenses of the

representative to be sufficiently similar not just in terms of their

legal form, but also in terms of their factual basis and support.

See, e.g., E. Tex. Motor Freight Sys., Inc. v. Rodriguez, 431 U.S.

395, 403-04 (1977). However, factual differences between the

proposed representative and other members of the class do not

render the representative atypical “if the claim arises from the

same event or practice or course of conduct that gives rise to the

claims of the class members.” Hoxworth v. Blinder, Robinson

& Co., 980 F.2d 912, 923 (3d Cir. 1992) (internal quotations

omitted). Complete factual similarity is not required; just

enough factual similarity so that maintaining the class action is

reasonably economical and the interests of the other class

members will be fairly and adequately protected in their

- 25 -

absence. Newton, 259 F.3d at 182-85; Hassine, 846 F.2d at

176-77.

The requirement that the proposed representatives not be

subject to unique defenses can be seen as an offshoot of the

requirement that the representative have circumstances that are

sufficiently similar to those of the class. It is well established

that a proposed class representative is not “typical” under Rule

23(a)(3) if “the representative is subject to a unique defense that

is likely to become a major focus of the litigation.” Beck, 457

F.3d at 301. We have explained the rationale behind this

principle, noting that the “challenge presented by a defense

unique to a class representative” is that “the representative’s

interests might not be aligned with those of the class, and the

representative might devote time and effort to the defense at the

expense of issues that are common and controlling for the

class.” Beck, 457 F.3d at 297. Other courts of appeals have

emphasized this concern. See, e.g., Gary Plastic Packaging

Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d

176, 180 (2d Cir. 1990) (“[T]here is a danger that absent class

members will suffer if their representative is preoccupied with

defenses unique to it.”); Hanon v. Dataproducts Corp., 976 F.2d

497, 508 (9th Cir. 1992) (same); J.H. Cohn & Co. v. Am.

Appraisal Assocs., 628 F.2d 994, 999 (7th Cir. 1980) (“[T]he

presence of even an arguable defense peculiar to the named

plaintiff or a small subset of the plaintiff class may destroy the

required typicality of the class . . . The fear is that the named

plaintiff will become distracted by the presence of a possible

- 26 -

defense applicable only to him so that the representation of the

rest of the class will suffer.” (internal citations omitted)).

A common thread running through the various

components of typicality—the requirements of similarity of

legal claims, factual similarity, and absence of defenses unique

to the representative—is the interest in ensuring that the class

representative’s interests and incentives will be generally

aligned with those of the class as a whole. See, e.g., Amchem,

521 U.S. at 626 n.20 (noting that “the interests of the class

members will be fairly and adequately protected” if the

representative’s claims are adequately interrelated); Beck, 457

F.3d at 295-96 (stating that the typicality requirement helps to

ensure that “the incentives of the plaintiffs are aligned with

those of the class”); Stewart v. Abraham, 275 F.3d 220, 227 (3d

Cir. 2001) (“The typicality inquiry centers on whether the

interests of the named plaintiffs align with the interests of the

absent members.”).

From the foregoing we glean the proper consideration in

assessing typicality to include three distinct, though related,

concerns: (1) the claims of the class representative must be

generally the same as those of the class in terms of both (a) the

legal theory advanced and (b) the factual circumstances

underlying that theory; (2) the class representative must not be

subject to a defense that is both inapplicable to many members

of the class and likely to become a major focus of the litigation;

The Report and Recommendation noted that “[t]he proper11

focus of a typicality analysis is on defendants’ conduct and

plaintiff’s legal theories,” and suggested that in an ERISA

§ 502(a)(2) case, “class certification should be almost

automatic.” (Joint App. 13.) The nature of ERISA § 502(a)(2)

claims does mean that commonality is quite likely to be

satisfied, so that the first part of the typicality

requirement—similarity of legal claims and the factual basis

supporting those claims—will generally be satisfied. But, as

this case demonstrates, that does not mean that class

certification is automatic. The other aspects of typicality, as

well as adequacy, must be considered.

- 27 -

and (3) the interests and incentives of the representative must

be sufficiently aligned with those of the class. 11

2. Wendel’s Typicality

Here, there is no doubt that as an individual bringing a

claim under ERISA § 502(a)(2), Wendel satisfies the first of

these conditions. Her legal claims, alleging several breaches of

fiduciary duty, are identical to those of the class she seeks to

represent. The basic factual circumstances supporting those

claims—namely, defendants’ conduct, Wendel’s participation in

the Plan, and her investment in Schering-Plough stock—are

shared by the rest of the proposed class. Indeed, the class is

defined so as to ensure this, requiring all class members to be

“participants in or beneficiaries of the Schering-Plough

Corporation Employees’ Savings Plan at any time between

It is worth noting that we agree with the District Court that12

Wendel’s deposition testimony does not preclude her from

acting as a class representative for the Plan. As noted in the

Report and Recommendation of the Magistrate Judge, the

testimony that defendants allege demonstrates a clear conflict of

interest is “subject to varying interpretations and does not reflect

any clear conflict.” (Joint App. 14.)

- 28 -

July 29, 1998 to the present and whose accounts included

investments in Schering stock.”

It is not at all clear, however, that Wendel satisfies either

of the other two conditions of typicality. First, as noted above,

Wendel signed a Separation Agreement that included a general

release and a covenant not to sue. As a result, she may be

subject to unique defenses that could become a focus of the

litigation, rendering her atypical and making class certification

inappropriate. For instance, even if a release does not bar an

individual from bringing an ERISA § 502(a)(2) claim on behalf

of a plan, it could be argued that the covenant not to sue bars

Wendel from filing a lawsuit and serving as a lead plaintiff in an

action against Schering-Plough. Second, it could be argued that

because of this release and covenant not to sue, Wendel’s

interests and incentives may not be sufficiently aligned with

those of the class. Given her release, Wendel may not have a12

monetary stake in the outcome. We do not decide these issues.

As the District Court did not consider the release to be valid, it

In this, our posture is similar to that of the Court of Appeals13

for the Fifth Circuit in Langbecker v. Electronic Data Systems

Corp., 476 F.3d 299, 313 (5th Cir. 2007). In Langbecker, a

(continued...)

- 29 -

did not delve into these aspects of her representation of the

class. It must do so on remand.

In addition, no conclusion as to Wendel’s typicality can

be reached without knowing more about the composition of the

class and, in particular, whether other members of the class have

signed releases and covenants not to sue. As noted above, the

typicality requirement is meant to ensure that class

representatives are sufficiently similar to the rest of the

class—in terms of their legal claims, factual circumstances, and

stake in the litigation. Currently, we know nothing about the

other members of the class, and, specifically, we know nothing

about how many of them have signed releases or covenants not

to sue. Given the above concerns about Wendel’s typicality,

additional inquiry is required into the factual circumstances of

the members of the class and whether her release and covenant

not to sue render her atypical.

Here, we do not decide these issues but only require that

the District Court conduct a more “rigorous analysis” into the

effect of Wendel’s release and covenant not to sue and the

extent to which other members of the class have signed similar

agreements. As stressed above, a class may be certified only13

(...continued)13

district court certified a class in which up to 9,000 potential

class members in a § 502(a)(2) claim had signed broad releases.

Id. at 313. A divided panel remanded the matter for further

consideration of the effect of the releases on the certification

decision. The court of appeals acknowledged that Ҥ 502(a)(2)

allows recovery that inures to the benefit of the plan as a remedy

for breach of fiduciary duties.” Id. The court also stated that the

“enforceability of the releases presents difficult questions,” and

the “impact of the releases should not have been excluded from

the district court’s certification analysis.” Id. The Fifth Circuit

was clear, however, that “we are not holding that the releases

foreclose any § 502(a)(2) suit on behalf of the Plan or foreclose

any class certification. We do stress, however, that the status of

perhaps nine thousand claimants is not a trifle—either to the

Appellants or the claimants themselves. The district court must

consider the releases more thoroughly on remand.” Id.

Our position is similar in that we agree that the release

does not foreclose Wendel’s § 502(a)(2) suit on behalf of the

Plan, but we do see the release and covenant not to sue as

relevant concerns for class certification and in particular for

satisfying the typicality and adequacy requirements.

- 30 -

after a rigorous analysis has been conducted to determine

whether the prerequisites of Rule 23 have been satisfied. As a

result, “[a]n overlap between a class certification requirement

and the merits of a claim is no reason to decline to resolve

relevant disputes when necessary to determine whether a class

As we discuss more fully below, we disagree with the notion14

set forth in the Report and Recommendation that “[t]he Court

must accept the substantive allegations of the complaint as true,”

citing Chiang v. Veneman, 385 F.3d 256, 262 (3d Cir. 2004).

(Joint App. 5.) As Hydrogen Peroxide makes clear, and as we

note below, Chiang is mistaken on this point. Hydrogen

Peroxide, 552 F.3d at 318 n.18. Additionally, the Report and

Recommendation invokes Eisenberg v. Gagnon for the

proposition that “[u]ltimately, doubts are resolved in favor of

class certification.” (Joint App. 6) (citing Eisenberg, 766 F.2d

770, 785 (3d Cir. 1985), cert. denied, 106 S.Ct. 342, 343

(1985)). Our decision in Hydrogen Peroxide makes clear that

Eisenberg should not be read in this manner:

Although the trial court has discretion to grant or

deny class certification, the court should not

suppress “doubt” as to whether a Rule 23

requirement is met—no matter the area of

substantive law. Accordingly, Eisenberg should

not be understood to encourage certification in the

face of doubt as to whether a Rule 23 requirement

has been met. Eisenberg predates the recent

amendments to Rule 23 which, as noted, reject

tentative decisions on certification and encourage

development of a record sufficient for informed

analysis.

(continued...)

- 31 -

certification requirement is met.” Hydrogen Peroxide, 552 F.3d

at 316. 14

(...continued)14

Hydrogen Peroxide, 552 F.3d at 321.

In Melong, class certification was denied because the15

representatives, who had not signed releases, were found

atypical and inadequate as representatives of a class that

included people who had signed releases. Melong v.

Micronesian Claims Comm’n, 643 F.2d 10 (D.C. Cir. 1980). In

that case, 7200 of 7500 members of the class had signed

releases, making it only a very small minority of class members

who were in the same situation as the proposed representatives.

There are a number of cases in which a class was certified16

in the context of a ERISA § 502(a)(2) claim being brought for

breach of fiduciary duties in managing a defined contribution

plan, despite the fact that the class representatives had not

signed releases whereas some members of the proposed class

had signed releases. See, e.g., George v. Kraft Foods Global,

Inc., 251 F.R.D. 338 (N.D. Ill. 2008); Williams, 231 F.R.D. 416.

In the latter case, a class was certified, but the district court

(continued...)

- 32 -

We note that there have been situations in which a class

representative has been deemed atypical for having not signed

a release when other members of the class have signed

releases. And there have been cases in which a class was15

certified despite there being either (1) class representatives

without releases representing a class that included people with

releases; or (2) ‘mixed’ class representatives (some but not all16

(...continued)16

required the plaintiffs to provide a class member to represent

those with releases in order to satisfy typicality and to address

any potential standing worries. Id. at 423-24. In limited

contrast, in Langbecker, the Fifth Circuit vacated a class

certification order in a similar ERISA § 502(a)(2) claim partially

on the ground that the class representatives had not signed

releases whereas 9000 of the 85,000 proposed class members

had signed releases, and the district court excluded consideration

of the releases from its certification analysis. Langbecker, 476

F.3d at 313-15. However, the Fifth Circuit did not find that the

class representatives were atypical because of the releases—only

that this should have been considered by the district court.

There are cases in which a ‘mixed’ set of class17

representatives (including people who had signed releases and

people who had not) was deemed typical and adequate to

represent a ‘mixed’ class. See, e.g., In re Aquila ERISA Litig.,

237 F.R.D. 202 (W.D. Mo. 2006). In that case, the district court

said that the issue of releases should be addressed later, noting

that the parties were free “to litigate that issue [the releases] and

request decertification of class members who signed the

releases” at a later point if necessary. Id. at 210-11.

- 33 -

of whom signed releases), representing a ‘mixed’ class (some

who had signed releases, some who had not). We have not17

found a single case in which a class was certified where the only

proposed representative signed a release and a covenant not to

sue and then attempted to represent a class consisting primarily

of members who had not signed releases or covenants not to sue.

- 34 -

3. Adequacy

The final Rule 23(a) class certification prerequisite, Rule

23(a)(4), requires that “the representative parties will fairly and

adequately protect the interests of the class.” Fed. R. Civ. P.

23(a)(4). The adequacy inquiry “has two components designed

to ensure that absentees’ interests are fully pursued.” See

Georgine v. Amchem Prods., Inc., 83 F.3d 610, 630 (3d Cir.

1996), aff’d, Amchem, 521 U.S. 591. First, the adequacy inquiry

“tests the qualifications of the counsel to represent the class.”

In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 532 (3d

Cir. 2004) (internal citations omitted). No issue has been raised

regarding the adequacy of Wendel’s counsel for purposes of

representing the class.

The second component of the adequacy inquiry seeks “to

uncover conflicts of interest between named parties and the

class they seek to represent.” Id. There are clear similarities

between the components of the typicality inquiry relating to the

absence of unique defenses and alignment of interests, and this

second part of the adequacy inquiry that focuses on possible

conflicts of interest. “Because of the similarity of [the typicality

and adequacy] inquiries, certain questions—like whether a

unique defense should defeat class certification—are relevant

under both.” Beck, 457 F.3d at 296.

- 35 -

For this reason, many of the same questions regarding

Wendel’s typicality also raise issues as to her adequacy. For

example, if some or most members of the class do not have

releases or covenants not to sue, then Wendel may be subject to

a unique defense. If Wendel’s release is held to bar her recovery

in the form of individualized augmented benefits, she may lack

the same financial stake as the other members of the class.

Also, Wendel may have different incentives in terms of how

much time, energy, and money she is willing to spend pursuing

the claim. See, e.g., In re Bell S. Corp. ERISA Litig., No. 02-

CV-2440, 2005 U.S. Dist. LEXIS 46823 (N.D. Ga. Sept. 30,

2005) (finding named plaintiffs inadequate class representatives

because of, among other reasons, signed releases: “the Named

Plaintiffs who signed such releases clearly cannot bring claims

on behalf of the class with the same vigor and interest as

someone who had not signed such releases”). Therefore, for the

reasons articulated above, the District Court must give further

consideration to the interests of the members of the class, and

the impact of the release and covenant not to sue, as bearing on

Wendel’s ability to be an adequate class representative.

C.

Defendants also challenge the temporal scope of the

class, contending that the District Court erred in granting an

open-ended class period that extends from July 29, 1998 to the

On September 30, 2008, the District Court ordered the18

following class to be certified:

All persons who were participants in or

beneficiaries of the Schering-Plough Corporation

Employees’ Savings Plan at any time between

July 29, 1998 to the present and whose accounts

included investments in Schering stock[.]

(Joint App. 35.)

The complaint was filed on March 30, 2006. (Joint App.19

124.)

- 36 -

“present,” and in concluding that it was bound to credit18

Wendel’s assertion that defendants continue to act imprudently

with regard to Schering-Plough stock. They urge that, under the

proper standard in this Circuit, the District Court had a duty to

go behind the pleadings to determine the appropriate class

period. We agree. This issue is dispositive, and so we do not

reach defendants’ other arguments regarding the open-ended

class period.

In the Report and Recommendation, the Magistrate Judge

correctly noted that Wendel alleged in her complaint that

Schering-Plough stock is an imprudent investment up to the

present. (Joint App. 23.) He also cited decisions of other19

E.g., Lively v. Dynegy, Inc., No. 05-00063, 2007 WL20

685861 at *6 (S.D. Ill. Mar. 2, 2007) (“Accordingly, the proper

termination date of the proposed class period is the date when

Dynegy stock ceased to be, as Plaintiffs allege, an imprudent

investment for the Plan.”).

- 37 -

district courts demonstrating that the correct class period in an20

ERISA prudence claim extends to the date at which the stock

ceased to be an imprudent investment, and reasoned that, since

discovery had not yet commenced, he would accept the class

period as alleged, “subject to potential future modification.”

(Joint App. 23-24.) The District Court adopted the Report and

Recommendation, and cited Chiang, 385 F.3d at 262, for the

proposition that it was “constrained to accept the substantive

allegations of the complaint as true,” in the absence of evidence

that the investment was imprudent by 2001. (Joint App. 33.) In

Chiang, we rejected arguments raised by a defendant that a

certified class definition was “overbroad,” reasoning that

because certain issues affecting class definition went to the

merits of the case, they could not appropriately be resolved at

the class certification stage. 385 F.3d at 269-70.

Chiang misstated the law on this point, and has been

disavowed in more recent decisions. In Hydrogen Peroxide, we

explained:

Chiang v. Veneman, 385 F.3d 256, 262 (3d Cir.

2004), decided after Newton and Johnston, cited

- 38 -

Eisen for the proposition that “in determining

whether a class will be certified, the substantive

allegations of the complaint must be taken as

true.” No supporting analysis of Rule 23

jurisprudence accompanied this statement, which

contradicts and conflicts with Newton, Johnston,

and Szabo (which we relied upon in Newton).

“To the extent that the decision of a later panel

conflicts with existing circuit precedent, we are

bound by the earlier, not the later, decision.”

United States v. Monaco, 23 F.3d 793, 803 (3d

Cir. 1994).

552 F.3d at 318 n.18.

In Hydrogen Peroxide we stressed that the decision to

certify and define a class requires a “rigorous analysis” that

“may include a preliminary inquiry into the merits.” Id. at 318

(internal quotation marks omitted). The District Court’s

acceptance of Wendel’s allegations without such inquiry in

reliance on Chiang, and its resulting certification of an open-

ended class period, constituted an abuse of its discretion. The

District Court should reconsider the class period on remand

under the correct legal standard, which may require the District

Court to engage in preliminary factual inquiries on the merits in

order to resolve questions pertaining to the appropriate end date.

We note, however, that nothing in Hydrogen Peroxide should be

ERISA § 404(c) provides in pertinent part that: 21

In the case of a pension plan which provides for

individual accounts and permits a participant or

beneficiary to exercise control over the assets in

his account, if a participant or beneficiary

exercises control over the assets in his account . .

. no person who is otherwise a fiduciary shall be

liable under this part for any loss, or by reason of

any breach, which results from such participant’s

or beneficiary’s exercise of control . . . .

29 U.S.C. § 1104(c)(1)(A).

- 39 -

read to preclude an open-ended class period, as long as the

period results from a proper application of law.

D.

Defendants’ last argument is that Rule 23(b)(1)(B) class

certification was inappropriate here because they may assert a

statutory defense under ERISA § 404(c), and the applicability of

that defense must be determined on a case-by-case basis.

Section 404(c) provides a defense to a breach of fiduciary duty

claim if the loss caused by the breach resulted from a

participant’s exercise of control. Defendants argue that a21

“judicial determination applying the § 404(c) defense against

one plan participant would not be dispositive of whether the

defense applies against any other participant.” Appellants’

- 40 -

Br. 41. Thus, the § 404(c) defense raises “individualized issues

regarding each participant’s decision to invest in the Stock

Fund,” and defendants contend that “[b]ecause the resolution of

these questions for any one participant will not be determinative

of the claims of any other participant, certification of a Rule

23(b)(1)(B) class was inappropriate.” Id. at 50.

The problem with this argument is that it confuses the

requirements for certification of a Rule 23(b)(1) class with the

requirements for class certification under Rule 23(b)(3). Under

Rule 23(b)(3), the Court must find that “questions of law or fact

common to class members predominate over any questions

affecting only individual members” and that “a class action is

superior to other available methods for fairly and efficiently

adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). This

gives rise to the requirements of predominance and superiority.

Under the District Court’s Rule 23(b)(1)(B) class

certification, however, there is no predominance or superiority

requirement. Rather, a class should be certified under Rule

23(b)(1)(B) when “prosecuting separate actions by or against

individual class members would create a risk of . . .

adjudications with respect to individual class members that, as

a practical matter, would be dispositive of the interests of the

other members not parties to the individual adjudications or

would substantially impair or impede their ability to protect their

interests.” Fed. R. Civ. P. 23(b)(1)(B). This is clearly the case

here, where Wendel’s proofs regarding defendants’ conduct

For reasons articulated in footnote 9 above, the Supreme22

Court’s recent decision in LaRue does not suggest otherwise.

- 41 -

will, as a practical matter, significantly impact the claims of

other Plan participants and of employees who invested in the

Stock Fund. Wendel’s claims are based on defendants’ conduct,

not, as defendants urge, on unique facts and individual

relationships.

In light of the derivative nature of ERISA § 502(a)(2)

claims, breach of fiduciary duty claims brought under

§ 502(a)(2) are paradigmatic examples of claims appropriate for

certification as a Rule 23(b)(1) class, as numerous courts have

held. See, e.g., Kolar v. Rite Aid Corp., No. 01-CV-1229,22

2003 WL 1257272, at *3 (E.D. Pa. Mar. 11, 2003); In re Ikon

Office Solutions, Inc., 191 F.R.D. 457, 467 (E.D. Pa. 2000); In

re Global Crossing Ltd. Sec. & ERISA Litig., 225 F.R.D. 436,

453 (S.D.N.Y. 2004); Jones v. NovaStar Fin., Inc., 2009 WL

943563 at *12 (W.D. Mo. 2009). Given this, it is simply not

relevant to the Rule 23(b)(1)(B) inquiry that “the attempt to

establish a § 404(c) defense will invariably” present individual

issues, as defendants argue. Appellants’ Br. 41. What is

relevant here is that the plaintiff’s claims about defendants’

conduct are sufficiently similar to those of the proposed class

and are not based on “unique facts” and “individual

relationships with the defendants.” Given that it is an ERISA

§ 502(a)(2) claim brought on behalf of the Plan and alleging

breaches of fiduciary duty on the part of defendants that will, if

Wendel contends that under Department of Labor23

regulations, § 404(c) does not provide a defense to the fiduciary

duty claims she is asserting. See 57 Fed. Reg. 46906, 46922

(Oct. 13, 1992) (“The Department emphasizes, however, that the

act of designating investment alternatives . . . in an ERISA

section 404(c) plan is a fiduciary function to which the

limitation on liability provided by section 404(c) is not

applicable.”). We need not reach these issues and do not decide

them.

- 42 -

true, be the same with respect to every class member, Rule

23(b)(1)(B) is clearly satisfied, and the § 404(c) defense is not

relevant.

Therefore, we need not consider the § 404(c) issue at this

juncture. In so concluding, we do not mean to imply that the

§ 404(c) defense would necessarily be problematic under Rule

23(b)(3), or that it necessarily applies with respect to Wendel or

more generally in ERISA cases of this sort. 23

IV.

For the foregoing reasons, we will VACATE the class

certification order and REMAND for proceedings consistent

with this Opinion.